Economic Review

A rough year? Slippage? The prophet season is past: no not Christmas, the annual economic predictions by one and all. I had spent a day or two sitting kaalgat in a cave in the Baviaanskloof (it was in the 40’s outside) reading “How Long Will South Africa Survive ”. The title suggests the answer, which is dismal. Essentially the writer holds that cadre development (read rewarding loyalists with patronage aka “political encroachment”) has reached such a level that almost all the institutions that matter in South Africa have been white-anted by our governing party. If only a fraction of the litany of woes that he expounds upon, is true, we are in deep trouble. (Judging by the recent faux pas made by the IEC in the North-West, the recent judgement of our Chief Justice that the State taking over one’s property as long as it holds that property as custodian for another– does not amount to expropriation and the Hlope saga – one must wonder about these surviving institutions also). Irrespective of one’s take on this, it would appear that our short economic walk to junk status has begun.

What will happen? Our internal unravelling has become too apparent: the World Bank has said that our expected GDP growth would be in the order of 1.4% this year, with a maximum potential growth of around 2%. Pragmatically speaking, our economic structure is such that we cannot possibly grow at the 5% plus rate that is required for us to progress as a nation. The situation is not lost on local business and our BCI is at its lowest annual average since 1993. The halcyon days of growth which might have eradicated poverty in South Africa are now but a mere memory. The world has judged us; investments have fled and our Rand is at a record low levels. We, in turn, have responded by voting with our feet by belatedly flooding money off shore. In fact, it is reported that the value of South African assets that pension funds, asset managers and private companies have invested overseas has outstripped those held by foreigners in South Africa for the first time. Those who have not yet moved money overseas are faced with the un-enviable choice of taking money overseas at a one third discount (in the belief that the Rand will weaken further) or waiting for the Rand to strengthen before doing so.

As an aside, the institution holding my retirement annuities recently informed me that I have now become “overweight” in allowable overseas exposure. My allocations of funds had not changed; the land they had weakened to the point where, in value, the overseas investment portion of my annuity had become worth more than the allowable 25% of the total investment. What is the point of an overseas Rand investment hedge if one is forced to change this when our currency drops like a stone?

Our government seems oblivious of the problem and one does not hold much hope that it will review our current economic structure. At present its focus is on nuclear power generation (a solution fraught/vrot with difficulty), the NHI (unconstitutional or unaffordable in its current form?) and, lately, a plan to create black industrialists. Our latest Minister of Finance did not particularly distinguish himself during his first term. But it is said that he will announce measures in his budget speech (a month and a half) which will place us on a sustainable fiscal path. Amen?

The pessimists hold that the Rand may reach R19/$; the optimists say that our economy is a cyclical one and one should simply be patient. It is said that the fair current value or purchasing power parity is approximately R10 to the dollar which shows the disdain in which our currency is held. The only real solace one has is that, on the Big Mac Index, hamburgers are cheap here-- at least until the drought really bites.

The EU is reported to be entering a year of solid economic growth. The economic recovery in that area is picking up to what is expected to be growth at just less than 2%.

Business Review

Facebook at Work, the professional version, is expected to launch shortly. Charges are expected to be a few dollars per user per month…

The newspapers report that we will be selling power to Zimbabwe owing to it being in dire straits with generating capacity in the Kariba down drastically. Now this is selling something that we do not have to someone who will not pay.

An interesting aside from the general gnashing of teeth accompanying the influx of migrants into the EU is that the open Shengen boundaries are set to be a thing of the past.

It is reported that the demerit system for road traffic offences will be implemented in April this year.

Property Review

The performance of the residential property market this year will be inextricably linked to the performance of our economy: virtually flat house price growth is expected, meaning that, price growth of 1.5% i.e., in real terms house price growth will be on a steady downward trend as inflation erodes the value of our currency.

BetterLife reports that higher deposits on the purchase of homes have become the norm. In the higher price categories, deposits now range from 15% to as much as 40% of the purchase price. The average deposit required by first-time buyers has shrunk by almost 12% to 45k. Many first-time buyers purchasing in the affordable range of around R500k were able to source bonds without any deposit.

Cases

Tender award: considerations that are extraneous to the tender evaluation criteria

Such cases are tiresome: essentially if a tender is called for, the entity awarding the tender has to judge those who tender, by the criteria that it had undertaken to apply on calling for the tender. Failure to do so will result in an unlawful award.

Westinghouse SCA case 476/15

Rates are payable on township subdivisions

This has been said before but, given the effect, is worth repeating: When a municipality levies rates on properties transferred off the remaining township land, it should not attempt to levy rates on the whole township but only on each newly developed erf as it is transferred.

City of Tshwane SCA 20771/14

When does one act as an estate agent?

The Estate Agency Affairs Act provides that an estate agent is a person who, for the acquisition of gain, holds himself out as a person who canvasses properties for sale and so on. It further provides that no person shall perform any act as an estate agent unless he holds a fidelity fund certificate, on pain of not receiving remuneration. In the case mentioned below, the spotter was not employed by the estate agency in question. He merely acted as a consultant and was paid a percentage of the commission by the relevant estate agency. The court found that the spotter had not been employed by the estate agency as agent. Resultantly the estate agency had to pay him a fee rather than a commission.

Haig Farming [2015] ZAKZPHC 47

Objections to municipal valuations

I do not wish to canvass this case fully: when one objects to a valuation of property by a municipality, that municipality does not have to furnish the reasons for its valuation. It is only required to address the issues raised in the objection. If without substance, the objection would fail.

Coutsourides [2015] ZAECPECH 66

Does prescription run against arbitration awards?

The Prescription Act applies to any debt except to the extent that its provisions conflict with any other Act which sets a time limit within which an action needs to be instituted. The question arose whether an arbitration award is a debt as contemplated in the Prescription Act. Generally speaking, Under the Act as it was, an award by an arbitrator is due on the date of the award, unless stated otherwise. Any action to make such an award an order of court, does not interrupt the running of prescription unless it is prosecuted to conclusion. The new section 145 provides that such an application for the review of an award interrupts prescription but is expressly made non-retrospective. Thus, in this case, given that the relevant award was granted prior to the advent of the new section 145, such award prescribed after 3 years.

Athaza [2015] JOL 34699 (LAC)

Quotables

If we teach today as we taught yesterday, we rob our children of tomorrow. Dewey

Weird & Wonderful

During December it was reported that the USA had miffed our government by not consulting it on the Fifa scandal in which it was said that our government had paid a $10m bribe to buy votes. I cannot imagine why they ignored consulting us beforehand….

This seems to be a “correlation challenge” relating to the continuous assessment marks given to pupils by teachers compared to the final exam results achieved by students. A quarter of pupils who had scored 50% or more in the continual assessment, ended up achieving less than 30% in the final exam. When one considers that our teacher union, Sadtu, refuses assessment of teachers, then the statement that our Minister has lost control of Sadtu is quite probably true. Don’t worry, we have “a good story to tell!”

December’s are long and hot. With speculation. Much of the pleasure of reading newspapers is the nonsense that one meets up with. The term “call girl” originated from a lady – whose passing away had been reported upon – called Madame Claude. Her career took off when she realised that there was an unmet demand among the well-heeled for women they would not be ashamed to show off in public. “There are two things that people will always pay money for: food and s@x, and I wasn’t any good at cooking.”

It is reported that Beyonce will star as Saartjie Baartman in a film to be made of that lady’s life. Imagine what will be done to this film on the Cape Flats from whence we derived the term Saartjie Baartman applied to that dikg@t Renault.

New terminology:

Pantypreneur - those who would use s@x to gain favour with the political elite. It is said that this term is racist.

“PoeierhФl” - someone who thinks more of himself than is warranted, someone who is opstairs. Incidentally, this term was applied to the spouse of one of the scions of our church who I caught nicking bromelias from a nursery. On Christmas day nogal! Mev. Dr. Ds. Poeier… You get the idea.

“Anthropocene” - the term attributed to the current man-made epoch, characterised by the destruction of our planet.

“Progressed learner” - someone who fails twice and then graduates to the next class.

“Philanthrocapitalism” - applying business models to giving.

Lighten Up

Times are so tough that:

I saw a Mormon with only one wife;

Exxon-Mobil laid off 25 congressmen;

Women are marrying for love.

Two doctors are involved in an argument in a hospital passage. A senior doctor separates them and enquires as to the problem. “There is an attorney in the ward which has only two days to live and he does not know.” “Well one of you will have to tell him.” “That is the problem”, says one, “we both want to.”

This Scotsman takes his girlfriend home in a cab. She is so beautiful, he can barely keep his eyes on the meter.

Father Christmas to his wife: Of course I went to my ex’s house last night. Its my work!

A woman sits crying in her hypnotherapists’ office: “Dr I’ve been faithful to my husband for these 15 years but have now sinned. The guilt is unbearable. Please hypnotise me so that I may forget that this has ever happened.” The therapist rolls his eyes and says: “Not again!”

Two farmers boast about their farms. One says: “I can get into my bakkie and drive a whole day without reaching my boundary”. The other responds: “Yes I also had such a bakkie once.”

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